Labour will today announce that it is to accept some of the government's key welfare savings next year, as the shadow work and pensions secretary Liam Byrne declares that reforms need to move at the "very fastest" pace.

In his first major speech since his appointment last month, Byrne will pledge to accept £2.5bn of the planned £3.4bn savings – those parts that are intended to increase incentives to work, and that will spread the making of savings around the overall system.

Byrne was appointed as shadow work and pensions secretary following the resignation of Alan Johnson. He will make clear that Labour must work hard to regain its reputation as the party of reform.

Echoing Tony Blair's declaration in 2002 that New Labour was "best when at our boldest", Byrne will say that voters in his deprived Birmingham Hodge Hill constituency demand a rapid pace of reform.

"When you look at things from where I stand in Hodge Hill, you have to say we were at our best when we were bold Labour. But while the business of reform might never have stopped, we weren't driving permanently at top speed."

In language which may surprise some in Labour circles uneasy at the pace of the coalition's welfare reforms, he will add: "When you see the wasted potential every day; when you work with the children I serve, then you believe that no other pace of reform but the very fastest will do."

Byrne will qualify his remarks by claiming much of the overall £18bn in welfare cuts will hit "workers not shirkers". He will say that nearly two-thirds of this April's cuts to budgets of families will pay for the higher unemployment to be caused by the slow economic recovery.

"The government has put the recovery in the slow lane and the squeezed middle is paying for it," Byrne will say as he says that the government is cutting children's benefits by £1bn more than bankers are being taxed.

"By the end of the parliament, the government will have slashed the support for families with children by nearly £3.4bn. Let me ask you, what kind of government takes £1bn more of children than bankers?"

But Byrne is prepared to accept more than three-quarters of £3.4bn in welfare savings next year in two areas. First, principled savings designed to increase incentives for work – Labour will accept limiting ESA payments, replacement for Incapacity Benefit, but Byrne wants it limited after two years, rather than one. Second, burden-sharing savings which spread the making of savings around the system – including accepting indexation of welfare payments from RPI to CPI, though for three years only, and not permanently.

Byrne will say he is prepared to work constructively with Iain Duncan Smith, the work and pensions secretary: "We support the principles of Universal Credit because it advances the revolution we pioneered with tax credits, to make sure work pays . It's why I say that we support the principles new Work Programme which advances the revolution of the Flexible New Deal. And its why I say this morning that if the government's new contracts are delivering and offering value for money, we will not cancel them if we are elected in 2015."